In
the year 2002, the world diamond trade put into place a protocol
known as the Kimberley Process Scheme, designed to address the
so-called “blood” or “conflict” diamond
issue. The following article looks at the potential impact of,
and the lack of political consistency in, the Kimberley Process.

The Kimberley Process – Appeasement
Comes to the Diamond Trade

By Charles Ellias and Richard Hughes

It’s done. Over. Finis. Press
the delete key. Burn the one-time pads. The world is now safe.

Whoa, pudner. What’s over? War in Iraq?Did we finally
nab Osama?

No. We speak of a different war – a conflict
over blood diamonds. With the recent signing of the Kimberley
Process Scheme, it is suggested that a large stone is out of our collective
shoes.

But while some might label the Kimberley Process
a milestone agreement that will save our trade tremendous grief, we believe
following these guidelines will actually chain a millstone around the necks
of American diamond suppliers and jewelry retailers.

How so? Read on…

Carbon apartheid

In the late 1990’s, it came to the attention of certain human rights groups that rebel
armies in Sierre Leone and Angola were enslaving local populations and forcing them to mine
diamonds. The rebels then used these diamonds to fund their armies and, in the process, committed
countless atrocities.

Only one problem. There is no inexpensive/reliable method of determining the
origin of a diamond.

Zip.Zip

The Thai government seized a large quantity of opium and dumped it into
the sea. I asked [Jimmy Yang] if any of the twenty tons had really been dumped in the ocean. “Oh,
yes! Oh, yes!” Jimmy laughed. “All twenty tons were dumped into the ocean – but
luckily there was a ship in the way. Not an ounce got wet.”

Lest we be labeled callous mercenary thugs,
may we state the obvious. We are just as outraged by the abuse of human rights in Africa
as any charter member of Global Witness. But the question is not whether one supports the
torture and killing of innocents, but how to best eliminate it. And with the Kimberley
Process, we find a protocol that not only does zip-dot-zip for human rights, but that contains
more liability than a fully-gassed Ford Pinto with a pair of broken taillights.

How so? Let’s start with the notion that a seal placed on a parcel
in a Third-World nation will certify the origin of the contents. Ah heck, let’s not even
consider the lowly Third World, but start with that acme of right and self-righteous, the good ol’ US
of A. Consider the Rampart
scandal in Los Angeles, where multi-kilos of illegal drugs in police lock-up went bye-bye. How
good are those seals? Only as good as the salaries of those with access to the vault.

Need another fer instance? A recent Pentagon audit found over $2.3
trillion in expenses that could not be accounted for.[1] While members
of Congress wring their hands about a partisan million or three, dozens of tanks and other major weapons
systems have literally vanished and never a discouraging word is heard.

As a nation, when are we gonna start looking at the big empty, meaning our
taxpayers’ pockets? For if a tank or thirty-three can go missing in the land of the free, how
difficult will it be for a few small rocks to go AWOL in Angola? Really, based on the evidence, what
right have we to point fingers at others?

Conflict of interest

Now consider the Kimberley Process Scheme. It requires all diamond wholesalers affix a rider
to the invoice stating that such stones are guaranteed to come from “conflict-free
zones.” The same is recommended for retailers. Specifically:

The seller hereby guarantees that these diamonds are conflict free, based
on personal knowledge and/or written guarantees provided by the supplier of these diamonds.

The Kimberley Process also calls for
this statement to be included on all invoices for the sale of rough, polished and diamond-bearing
jewelry. And with this simple sentence, we are told, we can make a difference.

Jeepers, we get all
tingly-pingly just thinking about it. The Kimberley Process can prevent human rights
abuse – another bullet need not be fired – long-suffering nations
will finally know peace.

Why? Because
in the post-Kimberley world, there’s just no way that a diamond from, say, Angola,
might bounce across a few borders into South Africa and get mixed into, God forbid, a
parcel from that nation. Absolutely no way.

Why? Because
the invoice says so. Because no one along the way will dare salt parcels with conflict
diamonds. Every crystal, no matter how miniscule, will be watched from mine to mounting.
No one ever misrepresents origin and every stone will be traceable. We are all safe. Truuuust
us.

Banning illegitimacy

But it gets better. The Kimberley Process also suggests the following on our invoices:

The diamonds herein invoiced have been purchased from legitimate sources not
involved in funding conflict and in compliance with United Nations resolutions.

Legitimate sources not involved in funding conflict? So the diamond people of South Africa were at the forefront of stopping apartheid?
We do not recall Nelson Mandela speaking of how diamond dealers were his champions? Anyone
foolish enough to believe this probably also believes that apartheid was simply about segregated
drinking fountains and restrooms.[2]

And what about diamond rough stockpiled during apartheid? Will those
diamonds be destroyed instead of sold? If not, why not? During the 1980s, why were those big bad Krugerrands
boycotted and not the “blood diamonds” of South Africa?

We are just looking for a bit of consistency here. If we as a nation are so
opposed to profiting from atrocities against humankind, then why didn’t we stand up and lobby
Congress to pass laws against these diamonds? The trade in these diamonds was exponentially larger
than today’s conflict diamonds.

Securely insecure

The Kimberley Process smacks of airport security checks post-9/11. Seizing nail clippers
and x-raying old ladies’ shoes might make some feel better, but will do absolutely
nothing to stop future attacks. You know this – we know this. Kimberley is simply
a weekend retreat for the naïve. Pssst: earth to diamond trade – it’s
now Monday.

But we take issue not just with the mechanisms of the Kimberley Process, but
with the entire premise. The very idea that diamonds are somehow to blame for atrocities in Africa
is ludicrous. Unlike the trade in weapons and drugs, where a very real cause-and-effect case for a
shot of mace can be made, the trade in precious stones features no such smoking gun. Diamond is an
inert substance. It cannot kill anything.

Goliath aside, it’s politics that kill, not a stone. The world is filled
with scores of countries where human rights atrocities regularly occur and yet where nary a pretty
pebble is found. Think Rwanda, think Ethiopia, think Indonesia, think Iraq, think Israel/Palestine.
The most egregious omission of the Kimberley Process is that it does absolutely nothing to address
the underlying political problems that brought the conflict diamond issue to the forefront.

Bullets and bibles

Imagine you are an idiot, and imagine you are a member of Congress… ah,
but I repeat myself.

Mark Twain

Government rarely misses beat when it comes time to regulate, even
when the facts are altogether contrary to its actions. For a glimpse of how such things work,
let’s look at a couple examples of Washington do-goodery.

Every year the bright lights in the capital are called on to certify whether
or not the rest of the world’s nations allow religious
freedom or support terrorism. Guess what? The lists they
produce are nothing except an illusionist’s trick – where human rights concerns hover in
front of our eyes – only to vanish into back-room smoke when it comes time to actually write
law.

Take religious freedom. China typically
gets thumbs-down for the suppression of religious cults and free speech. But missing on Washington’s
bad-for-bibles list is Saudi
Arabia, where not only is the Christian good book a banned tome, but where even more lenient interpretations
of the Koran are verboten.Call us dense but, Kee-rist, Saudi
Arabia is a nation where Porky the Pig cartoons are banned because, duh, eating pork is forbidden by the Koran, and yet the great minds in Washington
are so occupied with the yellow peril that they can’t pay attention to a few loony Muslim terrorists
mouthing sweet nothings like: “we will not rest until we have killed you infidels and all of
your progeny.”

And what of the government’s terrorism
list? Take a gander at that from the year
2000.[3] In the very year before the notorious Sept. 11 attacks,
the US State Department cited Iran, Iraq, Syria, Libya, Cuba, North Korea
and Sudan as state sponsors of terrorism. Now look real close.
Notice something missing? How about we spot you a few letters. Give us an
A, give us an F, a G, an H…

Yes indeedistan, in the list produced just before 9/11, the big A was
MIA, despite being home to Osama bin Laden and despite the fact that the US shock-awed Osama’s camps in that
nation with cruise missiles in 1998.

Grease

Lordy! Why didn’t Afghanistan make the terrorism list? And for petrol’s sake,
why didn’t Saudi Arabia make the religious suppression list? Welcome to the American Political Repertoire Theater’s presentation of Grease, courtesy of your sponsor, Big Oil. With Afghanistan, multinational oil companies
wanted to build a pipeline across the country, and if Afghanistan were on the terrorism list,
it would have been forbidden.[4] As
for Saudi Arabia, the US government again willingly overlooked its suppression of religious
freedom because that nation’s petrodollars funded so much of the “democracy” that
we never tire of lecturing the rest of the world about.

Again, we are looking for a bit of consistency. But digging beneath
the pithy public political pronouncements, we find sanctions and trade embargoes have more to do with
pure power politics than humanitarian concerns. Like a Rush
Limbaugh morality lecture, the charade is over once you catch el–Rushbo popping pills behind
the curtain.

Just say: “baaaahhh”

With the above in mind, we have to ask why the gem trade so willingly wilted when Congress
and the human rights campaigners came calling for a game of pin the scarlet letter on the
idiot.

Rather than bending over, we should have told the Feds that, despite the best
intentions in the world…

Controlling the trade in conflict diamonds will be even tougher
than controlling the trade in illegal drugs, and…

The Feds’ success record at the above totally disqualifies
them from substance suppression, and…

There is simply no reliable/cheap method of determining the origin
of a diamond, and…

Sanctions to control the 5% of problem diamonds would needlessly
harm those mining and trading a product that is more than 95% clean.

This isn’t just a case of the cure being
worse than the disease, but where the cure produces strange red spots and death within
48 hours! Unfortunately, our sheep-i-fied gem trade was
so frightened of being tattooed with the human rights abuser/terrorist label that they willingly
consented to a ridiculous law. And now, following the Kimberley Process, diamond wholesalers
and jewelry retailers are left completely sheared, with nary a nub or three to keep them
warm. Baaaahh.

I guarantee it!

How so? We speak of that little matter of a “guarantee.”

guarantee (noun) -
1. a written assurance that some product or service will be provided or will
meet certain specifications
2. a pledge that something will happen or that something is true

When a jewelry retailer guarantees a diamond comes from a “conflict-free
zone,” they leave themselves open to legal ravage.

As a “fer instance,” let’s say the purchaser brings the stone
back six months down the line with the following pronouncement:

You say this diamond is conflict-free? I don’t believe you. I think
you sold me a diamond mined by rebels in Sierre Leone. I think a young boy – one who
watched his sibling get his arm chopped off – was forced to dig that stone. I know
this because I saw it on TV!

Just what will be the jewelry retailer’s
response?

Here, here, my good man. This is patently false. Pureed poppycock! When I
bought this stone the invoice included a statement at the bottom guaranteeing it came from
a conflict-free zone. Just look at the invoice from my supplier. The guarantee is located
right under my wholesale cost.

And then customer says the two magic words: “Prove
it.” At that point, the jewelry retailer realizes that the conflict diamond is
still in his shoe, but now the sharp point is embedded in a real nerve.

Legal straightjacket: Pre-January 2003 Diamonds

Truth be told, there is no way to prove diamonds are conflict free. Every diamond currently
in the marketplace, whether sitting in a jeweler’s case, a dealer’s inventory,
or a manufacturer’s safe will not comply with the Kimberley process. Thus it will
have to be misrepresented or not sold at all.

And what about gems mined prior to the Kimberley Process? Kimberley states
that we should use the following on pre-Kimberley Process diamonds:

The diamonds herein invoiced have been purchased prior to January 1st 2003
from sources that, to the best of our knowledge, are reliable. The seller hereby guarantees
that they have no personal knowledge or reason to believe that these diamonds are involved
in funding conflict and/or have been traded in violation of any United Nations Resolution.

The seller hereby guarantees that they have
no personal knowledge or reason to believe that these diamonds are involved in funding
conflict?

Oh ree-lay? If we have no reason to believe these diamonds have been
involved in funding conflict, then why are we engaging in this babelspeak?

Is this a prudent statement? Don’t we actually have genuine reason
to believe the sales of at least a small number of diamonds have been involved in funding conflict?
Remember, while many Germans had no personal knowledge of Nazi death camps, the fact that Jewish neighbors
were stripped of rights and possessions and then carted off in cattle cars should have caused more
than just a little concern.

When a retail seller provides the guarantee, the burden is on the seller to
provide the proof. By offering up the Kimberley warranty, the jeweler has already failed this legal
test. Due diligence states you must act in the manner of a prudent individual. Offering a guarantee
on something you know cannot be proven is reckless at best and – in a legal sense – most
probably negligent.

Consumption

Most states have consumer protection laws. While
each state is different, let us show you how the Kimberley Fiasco might be dealt with
under the Michigan Consumer Protection Act.

MICHIGAN CONSUMER PROTECTION ACT
Act 331 of 1976

445.903 Unfair, unconscionable, or deceptive methods, acts, or practices
in conduct of trade or commerce; rules.

Sec. 3.

(1) Unfair, unconscionable, or deceptive methods, acts, or practices in the conduct
of trade or commerce are unlawful and are defined as follows:

(a) Causing a probability of confusion or misunderstanding as to the source, sponsorship,
approval, or certification of goods or services.

(b) Using deceptive representations or deceptive designations of geographic origin
in connection with goods or services.

(c) Representing that goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits, or quantities that they do not have or that a person has
sponsorship, approval, status, affiliation, or connection that he or she does not have.…

(s) Failing to reveal a material fact, the omission of which tends to mislead or deceive
the consumer, and which fact could not reasonably be known by the consumer.…

(bb) Making a representation of fact or statement of fact material to the transaction
such that a person reasonably believes the represented or suggested state of affairs
to be other than it actually is.

Finished

We are aware and appreciate that a large number of bright, sincere and globally-aware individuals
worked countless hours putting together what they believed was an acceptable agreement,
one that both addressed human rights concerns and protected the diamond trade.

While the Kimberley Process is an honorable attempt at making things right,
its language has opened a vast chain of liability pain. In particular, its “protection” sets
a dangerous precedent for an industry obtaining products from virtually every point on the planet.

We believe the language of these protocols is a mistake, leaving our industry
open to cynical manipulation by both politicians and special-interest groups with less-than altruistic
intentions. With money-laundering
laws that will impact our industry currently under discussion in Washington, it is all the more
imperative that we not just roll over and play dead – or we may well end up that way.

Having rained both feline and canine on the Kimberley charade, just what is
our solution? Glad you asked. In our decidedly unhumble opinion, more appropriate language would read
something like this:

The seller has attempted to provided conflict-free diamonds, based on personal
knowledge and/or relying upon information provided by the supplier(s). To the best of the
seller’s knowledge, the diamonds invoiced herein have been purchased from legitimate
sources not involved in funding conflict and in compliance with United Nations’ resolutions.
Due to the fact that it is virtually impossible to trace the exact origin of individual diamonds,
this is neither a guarantee nor warranty of conflict-free origin.

A wise man once declared that telling the truth
beats lying every time, if for no other reason than it’s easier to keep the story straight.

The above statement strikes a chord for that reason, because it is honest,
something any jeweler can repeat – hand on holy book – with no danger of breaking out into
a cold sweat.

And if you choose to follow the Kimberley Scheme? If you get in line like
a good little lamb and add the Kimberley statements to your invoices, you are certifying those diamonds
as conflict free. This represents an absolute guarantee, but, sadly, one that cannot be proven. Thus
you as the seller could be in violation of the law. Can you smell the courtroom?

At that point, the true meaning of “conflict diamonds” will
be driven home, as well as the meaning of two other words.

What, pray tell? For starters, we speak
of A-P-P-E-A-S-E-M-E-N-T.

And, of course, there’s that other nasty little word, the one
that truely scares the bejesus out of jewelers. How about we spot you a few letters. Give us an R,
give us an E, give us an F-U-N-D.

Think about it. And then next time the regulators come calling, just say “naaah” rather
than “baaah.” And demand our industry leaders do the same.

Further reading

About the Authors

Charles Ellias is a consultant for gem
artists, lapidaries, wholesale diamond and gemstone dealers, insurance companies,
retail jewelers, personal property appraisers, attorneys, independent adjusters,
and consumers. He has taught courses on manufacturing arts, appraisal sciences, consumer
courses on jewelry and gemstones, along with instructing insurance companies and
appraisers on jewelry appraisals and appraisal review. For more information, see
his North American Lapidary Laboratory website, www.gemartlab.com.

Afterword

This article was penned in mid-2003 and first appeared in The
Guide (2004, Vol. 23, Issue 1, Part 1, Jan.–Feb., pp. 1, 4–7,
15). This web edition is quite close to what Charles and I originally sketched up, and contains
material edited out of the print version.

Users may download this information for their own private, non-commercial use.

Other reproduction (text or graphics) without the express written consent of Richard
W. Hughes is strictly prohibited.

Ruby-Sapphire.com is dedicated to the free exchange of ideas on gems, gemology, the gem trade and other matters concerning the trade in precious stones and jewelry. Unless otherwise stated, opinions expressed herein are white those of Richard Hughes/RWH Publishing.